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tv   Mad Money  CNBC  October 22, 2013 6:00pm-7:01pm EDT

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chipotle. >> google. i'm still long. i still want to see it hold a thousand for a couple days before i suggest you get into it at this level. >> thank you so much for watching. see you back here tomorrow at 5:00. netflix lower in the afterhours session after carl revealed seln shares. "mad money" with jim cramer starts right now. my mission is simple. to make you money. i'm here to level the playing field for all investors. there's always a bull market somewhere and i promise to help you find it. "mad money" starts now. hey, i'm cramer! welcome to "mad money." welcome to cramerica. other people want to make friends. i'm just trying to make you a little hundred. my job is not just to entertain you, but to teach and coach you, so call me at 1-800-743-cnbc. this time, it's not bearish,
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it's bullish! a positive chief reason the dow rallied. we're back into bad news is good news mode here, and the bad news is that unemployment, well, employment is weak. employment is getting weaker. which will send interest rates back to levels that encourage all sorts of economic activity here. while at the same time driving the dollar lower to a level that benefits our big international exporters. meanwhile, inflation is coming down because of all of our newfound oil, making gasoline cheaper. wow. lower interest rates, lower dollar, lower gasoline, this is the stuff of greatness for the stock market. let me show you. first, we have lost entirely the bond market equivalent stocks. the stocks that did well because of the dividends when interest rates were low. now rates are in retreat and those stocks are roaring again. take kimberly clark. the company reported a spectacular number. thank you for coming on the show. hope to see you soon. and the dividend yield had
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gotten so outsized that the stock was ready to rock it, so it did, finishing up four points. kellogg, clorox, general mills, these were three other stocks that had languished. all three had been downgraded over the last week. you know what i think about those downgrades? >> boo! >> those downgrades, they look pretty darn stupid, because these stock are all about ways to get yield without losing any sleep at night. kimberly reported 5% organic growth and extraordinary acceleration. i was looking for about 3%. any stine the economy is slowing brings money to the other, like caolgate and hershey. and fears that we are suddenly going to slip back into a recession because washington is very tight with its money, and given the next employment number, we will be worse, because of the turmoil in washington, it has eroded the confidence where you need to start a business. pepsico, the standout snack and business company finally got confident for its excellent quarter, rallying, up a buck
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seven. and j&j lasted better too after his last drug report. my charitable trust proudly owns it. washington is like a tax leisure in my mind. here's what washington says. it says, you just don't know if you're going to have a 2,000-point decline or a stock market or our country is going to slip back into great recession mode because of the hatred of the three parties, the democrats, the republican, and the tea. with the latter still very much in ascendance, i think the latter is unstoppable. i think they're even stronger. and you know what will happen when you don't know -- when you have that kind of uncertainty, a three-party uncertainty, i'll tell you, someone who's started six businesses, you don't create another. it is washington's fault, we all know it. i just tuned them out and thought more about my fantasy league where i'm five in two. the second joy of lower interest rates. not that long ago, we thought mortgage rates which had gone from 3.5% to 4.7% were headed
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inexorably to 5%. at the same time where housing prices have flown up. the home builders have been saying, don't worry about it. but if they tell you to worry, they don't sell houses. day get their concern. now, the mortgage rates are dropping more toward 4% and home prices have started to stall out and come back a bit. it's as if ben bernanke, remember the critics of him, it's like ben bernanke totally got his way. and you can see it when housing-related companies report good numbers. after the disaster with stanley and black and decker, people sold down all the housing-related plays. but today whirlpool reported a magnificent number which caused the stock to rally 15 bucks. this is not a biotech company, 15 bucks, mostly on the backs of short sellers. betting it was indeed the next black and decker. it lit a fire on toll brothers and pollte.
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lower oil prices have led to renewed interest in travel and leisure. lower gasoline prices are fabulous news for disney, for its theme parks. that stock is recovering after last quarter. i have to be abject and slam those people upside the head who didn't like the disney quarter, like i did about the people who said negative things about whole foods. chipotle is climbing. i told you to be careful of panera. that was correct. lower gas price also help starbucks, which shot up to an all-time high today, despite the fact that we hear all these negative stories about china. don't forget, we're going to sit down with ceo howard schultz tomorrow and talk about how business is doing. low terrify energy costs, also go to the bottom line of the transports, including the airlines and freight companies. and delta report its best quarter ever and was able to raise prices nicely without resistance. did you hear me? an airline company able to raise prices without resistance? fedex won't quit. it's up another couple of bucks again. retailers have been down in the dumps quarter, nice bid,
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walmart, target, and tjx performing extraordinarily well. is tjx not the unsong hero of this market. and thaek start benefiting in the currency translations. you know i thought the decline in honeywell was fatuous yesterday. said the same last night. and today the company boosted its dividend by 10%, which was sharply more than i expected, showing me that the sell-off was nothing more than stupid money exiting stupidly. now, just consider that honeywell is a huge international play that will benefit the weak dollar. the biggest benbeneficiaries, t oil companies, are due to report, and i'm expecting big things from ford and gm. and yes, i am sticking my neck out on ford. i am saying i think it's going to be real good. so get out the guillotine if i get that one wrong.
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darn it. there it is. i just put it right like that. and while i know it's not price cyclical, mcdonald's is a giant beneficiary of a weaker dollar. do you know that the stock can -- all that hand wringing, stock's barely down. that means the international market is going to get better tor the translation will get better. the metals perhaps on international demand that could come from stronger currencies overseas also played a huge part today. freeport m-mcmoran put together very strong quarter. and let's get to this, let's say it. i want to go on record right here, right now. alcoa is starting to get jiggy! keep track of the latter. as i think it's about to make its long-awaited move into teenager status. there's too much good happening in alcoa for it to be kept down much longer. i intend to start banging the drum loudly and quickly for this one. not every company did well today. the big momentum stocks have been defying gravity, they came crashing down. netflix reversed after a big morning run. tesla couldn't rally. what is that about? it needs another endorsement.
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lincoln and yelp were treated as the profit taking. the banks started to dissipate. always tough when you don't know which government agency will take a shot at you any day. and the oils were really clobbered. pioneer natural enduring most of the pain, falling $1.79. i've been waiting for the weakness caused by fears that oil could be in for a big drop and we saw that today. these stocks are taking well-deserved breathers. nothing more. how long can all this good news come on? the jobs number was so weak and the next numbers are even worse means that we may be in for more interest rate declines. perhaps well under 2.5%. as long as rates stay stable or go lower, the backdrop could be considered benign enough to allow us to flourish until the next washington food fight. who knows, though? maybe this number shows the tea party politicians who despise this current administration, that perhaps even the people in their redistricted areas, who cling to their right to express themselves any way they want, hallelujah, actually care about not being thrown out of work. that could be something that brings us together.
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here's the bottom line. there was enough good stemming from this employment number, lower rates, lower oil prices, and a lower dollar that we bought some more rally. interest rate declines are never a bad thing, and the longer they go on, the more these winners keep powering higher, reminding you that when washington's away, the bulls, indeed, do play! john in california, john?! >> caller: jim, love your show. >> thank you, john! thank you very much! >> caller: i have a west coast beach point baa baa baa b-b-b- boo-yah for you! >> i kind of like that boo-yah. that works for me. i don't know if it works for everybody in the room. >> caller: i have a question. i've had btu peabody energy for a while. i bought it at 25 and took it down, but then i jumped on it at 12, playing the game, and now it's coming back nicely. i just wonder, do i get the -- does it have legs to get back -- >> well, you were playing a new game, a la van the man and brown-eyed girl. and you know what, it worked.
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you know, going down the old mine, the old freeport mine -- the old btu mine with a transistor radio. my portfolio trust has been in joy. we don't see a lot of joy in joyville, but i'll tell you, you're doing the momentum there, but please don't get greedy. freeport makes me feel a little bit better about the group, though. let's go to leo in louisiana. leo?! >> caller: big baton rouge boo-y boo-yah, jim! >> ben gal boo-yah! >> caller: lsu fighting tigers. next time you come back, we'll let you quarterback. i called you and asked you about delta airline. it was my 20th share. now it's 25 -- >> delta's not going up. this is the age of airlines. they're able to raise price. oligoplistic pricing is the best thing, even if it's not best for the rest of us. lower interest rates, lower
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dollar, lower gasoline, they all make for a higher market. "mad money" will be right back. coming up, how high? the market continues to hit new high after new high. but is the run done or just getting started? cramer's turning to the technicals to reveal patterns that could prove profitable. and later, search and destroy? google crossed over the $1,000 mark, but is this only the beginning of a march towards digital dominance? cramer's searching to find out if even more impressive results are yet to come. plus, job number one? could the key to fixing america's unemployment picture be in our own backyard? did oil-rich bakken shales help bring north dakota's joblessness to half the national average? and emerald oil has been drilling right in the heart of the play. don't miss cramer's exclusive. all coming up on "mad money."
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on a day when the volatility index, you know it at the vix, also known as the fear gauge, increased 1.92%, what should we take away from this move? was hear a lot about the vix these days, yet there still seems to be a fundamental misunderstanding of how it works. we'll clear that up tonight. you'll see people quoting the volatility index as an indicator all its own. that doesn't work. without context, the vix alone actually tells you very little. report fg the vix is higher on a day when the averages are down, that's kind of like saying, the bear fans were angry because the bears lost sunday. it doesn't tell you anything you didn't know, other than the fact that maybe you can't play cutler for a couple of weeks. as you might imagine, there's a powerful correlation between the
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so-called fear index and a market as a whole. when stocks go higher, the vix usually goes lower. when stocks go down, the vix tends to rise. all of this is pretty routine, right? however, when the correlation starts to break down, that's different. that's when the volatility index can be an incredibly important signal if you're willing to look at it. i mention this, because the standard correlation seems the to be breaking down right now, right before our eyes and that is not a good sign for the market. so tonight we're going off the charts with the help of mark sebastian with optionpit.com. writes to me on realmoney.com as well as being our resident vix expert here on "mad money." now, let's put this context. we've been able to spot a host of bottoms and tops, all of which were visible ahead of time, all because the visibility index wasn't behaving the way you would expect it. we've seen this over and over again this year. he's been uncannily right, and that's why i'm back talking to him again right now. but first, let's explain how
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this works. a little primer here. check out this chart of the s&p 500 and the vix since the beginning of 2013. notice how each time the s&p rallied, the vix tended to go lower, there's that chicago bears correlation. when the s&p got hit -- i mean, s&p gets hit, vix soars. again, that's coincidence stuff. now, sebastian points out when you see areas where the s&p is standing still or maybe creeping a little bit higher, but the fear index is also going up, that's been a clear sign that the market's about to take a dive. that's exactly what we saw in may and june, okay? in may and june, creeping, creeping, soars, dives. and it happened again in august, okay? creeping, creeping, soars, dive. and we saw it one last time last month, going into the debt ceiling crisis, where the s&p was trading sideways, okay? vix was suddenly climbing, s&p gets a bump. now let's take a look at what's happening with the vix and s&p
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over the last three weeks. during the man-made crisis that was the shutdown, sebastian notes that things were behaving normally. s&p was falling, vix rallied. man, that's all right. exactly what you would expect. especially when people started getting terrified that there might be an actual default that we wouldn't pay our bills. rise below, sink above. look -- there, i'm trying to do -- look closer, though. the vix popped out midday on october 9th. see, it topped out, but look what started -- that didn't go up. i mean, that didn't go up. that just stayed there. the vix goes down. this didn't rally. then the very next day the rumor mill started churning about a potential deal to end the shutdown and a rise in the debt ceiling and that crisis. on the tenth, it looked like -- if you looked at the rally in the s&p and the huge decline in the volatility index, it became increasingly that a deal would get done. these told the story much better than the panic we're seeing out there. according to sebastian, the
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smart money jumped in on the tenth and everybody followed on the 11th and stocks have been going up since. take a look at this, especially since this is what we have to worry about. something strange happened, something not great, for the bulls. that day, the vix started to rally along with the s&p. it did so aggressively. as the s&p moved up ten points, the vix soared from 12.5, all the way to nearly 13.5. you almost never see anything like this, especially going into a weekend. it's like watson with clues. remember, in the past, this pattern has been pretty effective at spotting tops. you don't want to see the vix rising at the same time the market's going higher, because it means the rally might be not on firm footing. so what happened here? sebastian sees two things going on. first, it thinks the institutional players are the smart money, when it had been at 22 weeks before and say, wait a second, don't we have a plethora of potentially dangerous data points hitting the wires? maybe that's all it is.
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but sebastian has a second explanation that to me is much more worrisome. he thinks the vix might be stating that we're at least close to a near-term top. at the least, he thinks the estimate could go to 1750, but didn't see it soaring to this levels two days after the deal was signed. just look at this chart of the vix and s&p over the last couple of days. yes, be soaring and the vix is soaring too. for sebastian, that's a very bad sign, one that requires immediate profit taking. you can see what happened today. the s&p 500 was up nicely, right? but the vix rallied as well. sebastian believes it's a clear signal that we've reached a near-term top, so it might be time to take something off the table. one last point. take a gander of this of the vix futures score. this is the best guest of what the fear index will look like over the next six months. and you can see going higher,
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more important, there's an area that's out of whack compared to the rest of the curve. the january, february, march time frame. sbast sebastian points out there's a serious event risk in 2014. that's when washington will take center stage once again as the government runs out of funding again and we approach the debt ceiling once again. and the people who don't like it this time, i think they've game schemed. the liberal press has been saying that they lost. i don't see it like that. i just don't. here's the bottom line. the charts, as interpreted by mark sebastian, say that this is the time to get cautious. he says you should take something off the table, because the vix is signaling that our troubles aren't over just because the politicians got their act together for the moment last week. if son-in-law because these politicians will be right back in the headlines three months from now, fighting over the same things, with some people, particularly tea party, totally emboldened to shut the government down, and it's going to start impacting the market once again. i'm not quite as pessimistic as
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sebastian, but we've seen this vix pattern play out accurately so many times, that i think it's very important to take what he's saying seriously and temper your and my enthusiasm. after the break, i'll try to save you some more money. coming up, search and destroy. google crossed over the $1,000 mark, but is this only the beginning of a march toward digital dodge dominance? cramer's searching to find out if even more impressive results are yet to come. customer erin swenson ordered shoes from us online but they didn't fit. customer's not happy, i'm not happy.
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. how does a company going from being a despised loser to a beloved winner in just 12 months' time? that's the big question when it comes to this incredible move in google, propelling the stock over $1,000 recently. we know the proximate cause. on friday after the close, google reported a truly spectacular quarter, and as a result the stock surged from $888 to $1,011. that is a 13.8 move in saa sing session. but you need to look back a full year if you want to understand what made these remarks truly remarkable. because at the exact same time in 2012, google was a dog, that total bow wow that was being written off, left for dead by wall street. and for a pretty good reason, too. october 17th, 2012, google reported a quarter that was wildly viewed as being absolutely hideous, causing the stock to drop from 755 to 695,
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almost an 8% decline in one session. >> boo! >> one year ago, google was virtually untouchable. i was one of the few people who said stick with the stock, and jim cramer on twitter, i was roundly hounded even more than usual. so how did management turn things around? how the heck did google from being poleaxed to go be widely praised in exactly 12 months? >> that was easy. >> buy buy buy. >> let's take a trip in the way back machine with mr. peabody so you can understand why the stock is even at these heights still worth buying. we're time traveling to a little more than a year ago, october 29th, 2012, a few days after google posted its particularly heinous third quarter. that's the day when bank of america and merrill downgraded goog in a piece of research titled mobile transition taking a toll, downgrade to neutral. that really captured the essence
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of what was wrong with google in the third quarter of 2012. that was the one that was in the middle of the day, they announced, it was supposed to come out at the end of the day, an exercise in impairmeembarras. at the time, google was taking it on the chin. google gets the vast majority of its revenue from selling ads and mobile ads are worth substantially less than advertisers the that show up on the big screen or the desktop. the analyst at bank of america and merrill laid out google's mobile dilemma in very clear and stark turns. and in that downgrade, and it was a good, well-written piece, he said the opinion of the stock had fallen to two camps. there are the bulls, quote, those with a longer-term view that believe the company is well positioned in mobile and can build a hardware and software eco system that can drive significant value creation and rival apple. and then there's the more cautious camp, the one he started belonging to. those that think the mobile advertising transition could be
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longer and create more advertising revenue and margin disruption than the street anticipates. that's what we always say on this show, okay, when you have margin disruption, when you have margin contraction, stocks go down. the piece painted a picture of two very distinct paths that google might end up traveling. if things go well, he acknowledged, and google built a staple of strong mobile assets, all a big potential. but he worried that all of the growth from mobile could be canceled out by the shrinkage of the desktop business, which he said, and i quote, could result in a deterioration of revenue and margin trends in 2013, end quote. after the hideous quarter google just reported, this analyst felt the latter cause was more likely and the deceleration of the pc side causing margins to get hammered was his biggest worry. he also called out a number of other issues, the controversial motorola mobility acquisition could be unpredictable, the losses there could continue, especially given the competition from apple, samsung, microsoft. meanwhile, regulatory agencies in both the u.s. and europe were investigating the company. and with decelerating growth, this bull turned bear didn't
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think the stock deserved to sell for much more than 16 times earnings, kind of what the average s&p stock sells out, even though this company is far from being average. i get where the guy was coming from. a year ago, google had just reported a quarter where its website revenue, the core business missed dramatically, but the company growing from an astounding to just 15%. the cost-per-click, or cpc, a hugely important measure, it declined by 15% that quarter. and sure, things looked bleak for google. so how did the company turn things around to the point where this is now a $1,000 stock? as it turns out, the bank of america and merrill analyst wasn't the only one who saw two possible futures for google. a bullish one where they triumph and a bearish one where they can't offset the weak from desktops and the mobiles
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collapse. you know who else figured it out? google's management. they recognized the same task. that's what you need to understand about great american companies. they always see the two paths they can go down and they figure out how they can get on the right one. and that's why google's a best of breed stock that i always talk about. it picked the correct highway. it googled back, saw no traffic, went for it! i don't want to give the bank of america guy a hard time here. that's wrong. that's not the takeaway. it didn't take them long to realize that google had the right stuff as he upgraded the stock to a buy. i've known many analysts who dig in their heels for a lot longer than that, including some of these netflix folks, and he's been right ever since he got back on the google train. when you look at the quarter that google reported last thursday, it's clear that they have answered all of the worries from a year ago. it grew 21% year over year. that eliminates that objection. meanwhile, youtube-branded video ads grew at an incredible 75 pace, 40% of the traffic coming from mobile. up from 6 two years ago.
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google was busy monetizing that traffic with those novel ad campaigns that are now succeeded. it eliminated that objection last year in the conference call. analysts were disappointed google couldn't give any specific answers about their mobile strategy. this year, google made it clear they're the king of mobile, with accelerated ad buys of 26%, which suggests that as people access the web for many more scenes, google has more ads. the company's android operating system is now the dominated system all over the globe. over a billion android devices have been activated worldwide, literally 1.5 million new ones every single day. all those android users are also using google search, google maps, google everything on their phones and tablets, creating a deluge of mobile ad revenue. in short, the bank of america and merrill analyst bullish scenario from last year, where the transition to mobile turns out to be more of an opportunity for google than a liability -- total reality. this year, google's paid clicks,
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the number of times people click on paid advertisement, they were up 26%. a little slower that be a year ago, but the cost-per-click, how much the company makes per click only declined by 8%, dramatically better than the horrific decline they reported last year. in other words, the damage from people abandoning the desktop is being contained. those regulatory investigations people were so nervous about, they're over. no harm done. meanwhile, the loss, i found them predictable, under control, and maybe reversing. i think the morgan stanley piece this week put it perfectly. it was the best idea's recommendation, right after google reported. what it said, google was a dominant, high-margin internet utility. what a great term, that has consistently been able to create core revenue growth of 27% or more. but do you know this stock is trading at 19 times next year's earnings assessment? that's like kellogg, people. that's like general mills. do you think cereals has the growth this company has? it's very possible that those estimates for google could be too low. and when you back out google's $148 in net cash per share, the
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stock is trading at 16.4 times next year's earnings. that's the same as an s&p stock that has half its growth. it's still absurdly cheap considering the consistent high growth that google is now delivering. here's your bottom line. when a young, smart company with lots of cash and a dominant franchise stumbles like google did a year ago, you shouldn't be so quick to abandon ship. google was at 695 when bank of america downgraded it over a year ago. over the next month, the stock did, indeed, drop another 50 points. but then it began a rebound. thanks to management's fabulous execution, google really hasn't looked back since. if you bought google in the sell-off a year ago, you got a 44% gain. even after this epic run, i still believe google is worth buying, right up here. in fact, i think it's too cheap to ignore. how about don in north carolina, please. donna? >> caller: hey, jim! love your show. >> thank you, donna. >> caller: here's my question. what's up with cypress semiconductor? a couple of months ago, you had
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them on your show. the outlook looked good, financials, not to mention the touch screen revolution, right? but the stock keeps lowering. so what's -- >> it's been a huge disappointment to me. and i've got to tell you, this is always my fault. it's not like the ceo hasn't delivered. i didn't deliver for you, the viewer. i believed, i thought there was a big turnaround going, t.j. rogers put a lot of his own money up. i thought it was the right level. i got it wrong. i believed, it's my fault, i'm surprised the stock's as low as it is, but they did disappoint this quarter. hope is not a strategy, i can't tell you i hope it comes back, that's not rigorous. i'm just saying, i got it wrong. let's go to fauzi in colorado, please. fauzi? >> caller: big boo-yah, jimmy, from fauzi in colorado. i want to talk about yahoo!. >> yahoo!? i see your dog and i raise you my dog. yahoo!, i think, is going to plateau until the next bit of
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information about ali bobba. so i'm going to tell you you have to watch our morning show, "squawk on the street," and listen to david faber. he knows the ali babba story better than anybody. i'm going to ask him and i will come back. yes. even at these levels, google is not done going higher. management pivoted. they found the road less taken, the profitable road. stay with cramer. this veterans day, "mad money" honors those who defend our country's freedoms, by helping to defend their financial futures. if you or someone in your family is proudly serving or has served in america's armed forces, we invite you to join our live studio audience on november 8th for "mad money" invest in america, absolute to the troops. for tickets, go to
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the "lightning round" here on cramer's "mad money." rapid-fire calls, buy or sell. i don't know the calls or questions ahead of time. when you hear this sound, the "lightning round" is over. are you ready, skee-daddy. time for the "lightning round" on "mad money." i want to start with brad in kansas. brad? >> caller: cramer! a big, big boo-yah from the lower manhattan apple, kansas. >> i love that. manhattan on the call. what's happening? >> caller: the stock i want to ask you about is disney, din. >> all-time high, i'm not backing away. i liked it at 63 last quarter. i got to tell you something, i think disney's a great, great story. let's go to bob in new york. bob? >> caller: hey, jim, a big boo-yah from me here in keene, new york, home of the high peaks and the adirondacks. >> well, i'm a 64er and many of them in winter. >> caller: i'm even a bigger fan of yours. here's my big question. should i take the money that
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made the safe, which has doubled recently, and put it into -- back into linn energy. >> what that's an intersection question. we at actionalertsplus.com, we trimmed some of our facebook, because we added double. linn, still waiting, they did file a document. i'm waiting for the s.e.c. to bless things, and if they do, yes, it would be the right thing. but we can't move until the s.e.c. blesses. tracy in texas. tracy? >> caller: hey, jim, how are you, dear? >> caller: good. how are you? >> caller: good. i wanted you to unstump for me on my confusion or the street's confusion of what i read in the transcript of the earnings of microron and why they were so unappreciatei -- >> this stock ran up in anticipation of the closing of the deal, people said, i got to get off this horse. this is pure profit taking. i don't think it's a bad thing. i don't mind selling half if you bought it in the 8 to 10 level. i would take that profit on half. tom in illinois. tom? >> caller: big boo-yah from all
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the packer fans in illinois. >> well, you know, i got -- i have lacy, i think it's going to be a monster week. don't forget, you can run on the vikings. what's up? >> caller: okay. i bought -- started buyi inin i baxter at 62, what do you think? >> i want to buy baxter. let's go to chalmers in new york. chalmers? >> caller: a boo-yah to you, jimmy! >> nice. what's up? >> caller: a quick shout-out to my family in cold spring harbor, i love you guys. >> love them too! >> caller: jim -- thank you. this stock has my attention. laredo petroleum holdings. >> well, laredo is good. laredo is not unlike emerald that we saw today, not unlike eog. there are a lot of these companies that have just had great, great, great moves. be careful. oil, itself, is going down. i would sell a quarter of laredo and let the rest run. and that, ladies and gentlemen, is the conclusion of the
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"lightning round"! >> the "lightning round" is sponsored by td ameritrade. coming up, job number one? could the key to fixing america's unemployment picture be in our own backyard? the oil-rich bakken shale has helped the bring north dakota's joblessness to half the national average and emerald oil has been drilling right in the heart of the play. don't miss cramer's exclusive. five tech stocks with more than a 10%... change in after-market trading. ♪ all the tech stocks with a market cap... of at least 50 billion... are up on the day. 12 low-volume stocks... breaking into 52-week highs. six upcoming earnings plays... that recently gapped up. [ male announcer ] now the world is your trading floor. get real-time market scanning wherever you are with the mobile trader app. from td ameritrade.
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even with the price of oil falling under $100, i'm still a big believer in the independent domestic oil producers. we simply have so much newfound crude in this country, these companies will be able the to deliver terrific growth for years, not months, not quarters, years to come. that's why by popular demand, i want to introduce you to emerald oil company, a tiny high-risk domestic name where the growth is phenomenal. this $8 and change a stock is not for the feint of heart. emerald mainly operates in the williston basin in the dakotas, canada. the home of the bakken shale. we visited that, brian sullivan and our friends. they have nearly 60,000 acres
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containing 313 drilling sites. the company has two rigs running right now, but they plan to have a third next year. the key is that emerald expects to double its oil prediction from 2013 to 2014. while the company is not yet profitable, they expect to turn a profit starting next year. and they have some holding in colorado's shale, as well as other less well-known plays in montana. let's dig deeper with the president and ceo of emerald oil to find out more about his company and where it is headed. welcome to "mad money." >> hey, jim. big boston boo-yah. >> i'll take that. you know we were there. take a seat. it seems like every day, we discover there's a new one in williston. where have you been and where you going? >> we've got 695,000 acres in the core of the williston basin. 45,000 acres are in central mckenzie county where we have two drills running right now. the balance of the acreage is in williams county, north dakota, and richland county, montana. >> so montana we've not even
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looked at at all. is montana as oil rich as north dakota, that portion? >> jim, it's actually highly prospective. we've seen a lot of wells drilled over the course of the last several months and have been following the results of a lot of different operators in that area. >> here's what's amazing to me about this whole thing. how where we are three, four years ago. is this old technology that we didn't know was there. has core labs discovered, wow, montana's better than we thought? >> we think core labs is a great company. we've been one of the technology pioneers in central mckenzie county. we've been using geosearing on all of our wells to stay within a 10-foot tolerance within the laterals. we've been using slick water fracs in each of the individual stages. and i think that's contributing to the very well good results we've seen in mckenzie county today. >> what do you do when the oil comes out? do you have infrastructure? >> funny that you ask that. we have been trucking the oil
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out. >> okay. i knew someone was still trucking. >> but we just recently signed a deal to have an oil pipeline installed, which a large utility is going to put the capital in and it will reduce our transportation costs by more than $1 and it will be online by the beginning of the first quarter of 2013. >> so you've sold enough assets to be able to make it so you don't need to come to the markets, so you're fine of all of next year. >> we just completed capital raised for $140 million. and our private equity added another $30 million. so we have in excess of $200 million of cash on the balance sheet, and no debt right now. so we're more than fully funded to drill to our plan for -- >> well, sould yhould you go fl here and add some more rigs? >> we think a third rig is the right step in april of next year and the next logical step after that is to put a fourth rig on in the first quarter of next year? >> how about nighabra. >> we're focusing all of our
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capital to the williston basin. >> while i like it, i know it's hit or miss, where it seems like williston is 100% hit. how are you finding workers and how much do you have to pay them. and is this one of the situations where our viewers could say, you know what, i'm down and out on my luck. i'm going to get to emerald oil and i'm going to get a job. >> we're actively hiring in the williston basin. >> you are? >> yeah. please give us a call. finding skilled, experienced workers has been a challenge for everyone in the williston, but we've been able to navigate it today. >> where are we in this country? a few years ago, north dakota was the fifth largest oil producer, then fourth, then the third. now, obviously, eagleford and permian have come back. texas is going to be big. but is willis even bigger than we thought? >> jim, the aerial extent of the williston just continues to grow. >> it does. >> the usgs had a 7.4 average barrel estimate on it. i think you're going to see that average continue to move up. >> what do you think about what we're going to do for the year
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there? >> our year-end guidance is average 2,300 b.o.e. a day and next year averaged at 3,300 b.o.e. a day. >> that's a good little -- >> we'll be giving guidance on our upcoming quarter call. >> i'm glad someone called a about you. we're looking -- look, cog already moved up a lot. and you know, it's just -- there's not a lot of guys left who are still in your market capitalization stretch. >> and jim, i would highlight that our valuation is still very low compared to all of the -- >> absolutely true. so mcandrew, listen, it's still cheap, it really is. stay with cramer. thank you. >> thank you, cramer.
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don't you dare blame reid hastings, ceo of netflix, for losing you money if you bought the highest flying stock netflix. this morning it was up huge before the hideous intraday reversal. i have never, ever heard a ceo give a more brightline admonition than hastings when he reported this one. his most important line in the whole release, in calendar year 2003, we were the highest performing stock on the nasdaq. we had solid results compounded by investor-fueled euphoria. some of the euphoria today feels like 2003, end quote. he might as well have said,
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sell, sell, sell. there's talk that this down beat projection may be be the prelude to an equity auction. but who doesn't need the money? there is, however, something unprecedented here. executives always want you to buy their stocks. they think it's a great time to buy. but one of the best in the business doesn't. i think this is a note which says, quote, we are trading on fundamentals. we are trading on heart, on culture, and of course, on momentum, end quote. this pre-market netflix rally, which reversed and reversed hard today is exactly what happens when you've got a stock that goes automatically higher because certain benchmarks aren't hit that aren't earnings benchmarks. think about how we value netflix. earnings per share? by revenues, absolutely not. it's by subscriber growth. the decision, therefore, is binary. better than expected subscriber growth, not. slower than expected, sell. they have to do that. if it's short, they have to cover because the only thing they're really betting on is that fewer people signed up and as the stock goes higher either
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through new content like "house of cards," the analysts have to take their price targets up, because they use these price targets that are so important. it's an eerie virtuous circle based on price targeting. as they introduce sequels, people have to catch up by watching netflix. now netflix is one of my anointed ones from earlier this year. a stock that can't be contained by the four walls of the analyst canvas. it's like amazon, solar city, and tesla. can you believe elon musk owns two of them. we know netflix has expansion plans that need to be funded as well as continual demands. we know that international is not easy. on the call, if you can call it that, the company even admitted that it was gamed by brazilians playing signup games. but we know that after this quarter, netflix is, indeed, the worldwide gold standard for home entertainment. and at $20 billion in market capitalization that's still, sorry, reid, cheap versus the
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scale of the organization and the ability to shape more favorable deals down the road. yes, reid's right, it does feel like 2003. yes, this has become the ultimate caveat stock. even carl icahn. but yes, because of the way momentum investors evaluate stocks, netflix is good until it's bad. it soars until it crashes. remember, there are always a couple of stocks like this in the stock market at any given time. this one has lasted longer than most. i have said that netflix should be bought by apple. that was when the company had market cap of $12 billion. now that it's almost doubled from there, we know you're buying it for the idea that the company might be acquired. you're buying it for one reason and one reason only. someone else will buy it at an even higher price than you, you hope. as long as you can remember that rationale, as flip as it might be, you'll be just fine. revolutionizing an industry can be a tough act to follow,
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helping thousands of companies simplify how work gets done. how's that for an encore? with xerox, you're ready for real business. customer erin swenson ordebut they didn't fit.line customer's not happy, i'm not happy. sales go down, i'm not happy. merch comes back, i'm not happy. use ups. they make returns easy. unhappy customer becomes happy customer. then, repeat customer. easy returns, i'm happy. repeat customers, i'm happy. sales go up, i'm happy. i ordered another pair. i'm happy. (both) i'm happy. i'm happy. happy. happy. happy. happy. happy happy. i love logistics.
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panera, as predicted, not that strong. they will get a reset, we can go back to panera. carl icahn sells a big stake in netflix. there's always a bull market somewhere and i try to find it right here you on "mad money." i'm jim cramer and i will see you tomorrow! disastrous obama care web site and call center. tech experts from company like verizon are joining the effort and former omb director is now in charge of the big fix. the focus on the technical problem misses the big picture. obama is a wealth redistribution program and it ain't going to work. and speaking of work, today's tepid job report for september makes it plain the

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